Panama fever (33 page)

Such was the backdrop for the sensational trial of de Lesseps father and son, Eiffel, and two other Company directors, which started on January 10, 1893. Ferdinand de Lesseps was excused from attending because of his rapidly fading health. The defendants were well represented. Neither Ferdinand nor Charles de Lesseps had made any real money from the canal, their lawyer pointed out. Clearly, neither had benefited from any fraud. As for maladministration or misleading the investors, didn't every great project run vastly over budget? The Marseilles Canal was supposed to cost 13 million francs, but was not finished before an expenditure of 45 million francs; the Manchester Ship Canal, too, had massively exceeded its budget. If the de Lessepses had sinned, the defense argued, it was only through “excessive optimism.”

But the public clamor for a scapegoat had made the advocate general determined to get a conviction, describing the attempt to build the canal as “the greatest fraud of modern times.” Ferdinand de Lesseps and his son were both indicted for fraud and maladministration and given five-year prison sentences. Charles de Lesseps, his face in his hands, wept as the judgment was handed down. It was taken for granted that his father, who, reportedly, was not even aware that the trial was taking place, would not be fit to go to prison. Two other directors got two years and a fine. Eiffel, found guilty of making a 7-million-franc profit for work he had barely started, was sentenced to two years’ imprisonment and a fine of 25,000 francs.

Four months later the sentences were quashed on a technicality by the Supreme Court, but by then the situation had worsened for Charles de Lesseps. The parliamentary investigation, carried out in a febrile atmosphere of allegation and counter-allegation, had turned up one sensation after another.

The Chamber of Deputies Committee did genuinely try to answer the question posed back in 1890: what happened to the money? Much, it was immediately apparent, had gone to the large contractors taken on in late 1886. Few of them had achieved a fraction of their contracted total excavation, but some had somehow, nonetheless, cleared huge profits. The various banks and syndicates that handled and occasionally underwrote the bond issues had also made eye-wateringly huge profits from their business with the Company. Some 10 percent of the Company's total receipts, over 100 million francs, had disappeared against the cost of the flotations. Part of this cost was money paid to the press, and not all of it for advertising space. Twelve million francs had been distributed between 1880 and 1888, it emerged, with the largest “subsidy” going to
Le Petit Journal
, which had stayed loyal to the Canal Company right till the end. An astonishing 2,575 magazines and periodicals had received cash payments to plug the canal venture, including, bizarrely,
Marriage Journal, The Poetic World
, and
Foresters’ Echo.
Some small journals, it appeared, had been established purely to benefit from the “Panama Check.”

And when the Company became involved with the government over the lottery request, it had found a whole new raft of even greedier and more dangerous parasites. Check stubs were found that indicated that the former minister of works, Charles Baïhaut, had received 37 5,000 francs as payment for forwarding the original lottery bill to the Chamber back in 1885. Among others who had received bribes was Charles Sans-Leroy, who at the last minute had changed his deciding vote and thus ensured the success of the second lottery bill application. The evidence caused a sensation, and a new word,
chéquard
—check taker—entered the French language.

The corruption trial opened in March 1893, with Charles de Lesseps and the Company secretary accused of making bribes, and five deputies and one senator of receiving them. Charles de Lesseps, in prison since December, seemed a different figure from that of the first trial. His “face was drawn and his skin yellowed,” and his earlier courteous manner had been replaced by a quiet outrage. He was not guilty of bribery, he argued, but a victim of extortion. The minister for works had demanded a million francs to keep the lottery bill alive, he testified. The 375,00 francs was just the first installment. When the bill was subsequently rejected, Charles de Lesseps had refused to pay Baïhaut any more. Since the failure of the very first share issue in August 1879, Charles said, the Company had found it necessary to pay for press and political support, and for the goodwill of the bourse. “They seemed to rise up from the pavement,” Charles said of the
chéquards.
“We had to deal with their threats, their libels, and their broken promises.”

Charles Baïhaut tearfully confessed to having received money from Charles de Lesseps for his support of the lottery bill. But Sans-Leroy insisted that although he had suddenly paid off debts to the tune of 200,000 francs, the money had come from elsewhere. Likewise, the other politicians denied any wrongdoing. For the verdict on March 21, 1893, the aroma of whitewash was heavy in the air. All of the deputies but Baïhaut, who “had been stupid enough to confess,” were acquitted of the charge of receiving bribes. Nonetheless, Charles and an intermediary he had used were still found guilty of bribery and were sentenced to one year's imprisonment each. Baïhaut was given five years’ solitary confinement in the notorious étampes prison, a huge fine, and was ordered to repay the bribe. Should he be unable to manage this, Charles de Lesseps became liable.

A few months after his second trial, Charles de Lesseps was allowed to leave prison to visit his father on a day release. Accompanied by two policemen, Charles made the journey to La Chesnaye. His father greeted him with “Ah, there you are Charles …Has anything new happened in Paris?” The old man never asked about the ever-present policemen, and after a long walk with his father in the woods near the house, Charles was returned by his guards to his prison cell.

Soon after, Charles became ill and was in the hospital when released in September 1893. But within a couple of months he was forced to flee to London, having become liable for Charles Baïhaut's fine. By this time, Ferdinand de Lesseps's mental state was mercifully such that he knew little of what was going on, and he remained sequestered at home within the family circle. He died in December 1894, a few days after his eighty-ninth birthday. However many people had lined their pockets at the expense of the shareholders, de Lesseps had not been among them. His family were so poor that the funeral expenses had to be met by the board of directors of the Suez Canal.

he waves of scandal did nothing to help the receiver in his battle to rescue something from the mess on behalf of the investors. The option of abandoning the project altogether was seriously considered, but the impossibility of dividing up the remaining assets among the legion of creditors, of all descriptions, and the almost negligible return it would have meant, persuaded the liquidator that the best option was to keep the concern alive—either to press on and build the canal, or sell it to the highest bidder.

A new concession was negotiated with Colombia, and in October 1894 the Compagnie Nouvelle du Canal de Panama was formally incorporated, paid for by contributions extracted under threat of criminal prosecution from those who had made the most outrageous profits from the old Company. Eiffel was one such “penalty shareholder,” as was Bunau-Varilla. Only the American company, Huerne, Slaven, “one of the enterprises which made some of the most scandalously excessive profits out of Panama,” escaped, having their books in the United States, safely out of reach. In all cases, “penalty shareholders” were forbidden involvement in the running of the new company.

The whole effort of the New Company is characterized by caution and parsimony. In the absence of any firm blueprint, the desultory work undertaken was concentrated in the Culebra Cut, which would need to be lowered whatever the final scheme decided on. Efforts were made to attract investors, while keeping the canal a French project. To make it more sellable, a detailed plan—for a lock canal with a dam at Bohío—was put together by yet another international commission of experts. Bunau-Varilla, acting independently and considered something of a liability by the New Company directors, even managed to catch the interest of the tsar of Russia after a fortuitous meeting with a Russian prince on a train to Moscow. But nothing came of it. No private company had the enormous resources needed for such a project, and no foreign government would dare defy the United States by setting up in their backyard. At the end of 1898, with the original capital almost gone, the directors had only one choice. Reluctantly, clutching their latest plans, they headed to Washington where they were received by President William McKinley.

According to Bunau-Varilla, the Americans received the offer with “scepticism.” “It would never have come to anything,” he said, “had I not at that moment begun my campaign.” How the Americans came at last to take over the Panama Canal, in a U.S.-controlled zone of a newly independent country, is as controversial and murky a story as any from the de Lesseps years.

CHAPTER FOURTEEN

HEROES AND VILLAINS—
THE “BATTLE OF THE ROUTES”

The skepticism of the American leadership in late 1898 had nothing to do with the principle of a U.S. government–owned and controlled canal in Central America, nor with the “entangling alliances” that it would inevitably involve. In fact, the 1890s had seen the United States become more outward looking and expansionist than ever before. Important thinkers like Alfred Mahan, whose
The Influence of Sea Power Upon History
was published in Boston in 1890, were arguing that a canal, guarded by an expanded navy, was necessary not only as a means of commercial expansion for the now preeminent U.S. economy, but as a conduit for sea power (what Mahan saw as the truest judge of a nation's greatness). Above all, the canal presented itself as a way of spreading “superior Anglo-Saxon civilisation” across the region.

The war with Spain in 1898, motivated in part by fears of German ambitions in the region (Admiral Tirpitz had declared an interest in German control of a Panama Canal), had seen the acquisition by the United States of the Philippines, Puerto Rico, Hawaii, and, effectively, Cuba, and the need for a short sea route to link these new possessions, as well as the two coasts of the mainland United States, seemed more urgent than ever. Before the war, McKinley had set up the Isthmian Canal Commission under Rear Admiral John G. Walker to study the canal question, but it was an incident during the fighting that effectively ended the long-standing objection of Congress to taking on the work as a government-funded project. At the beginning of the conflict, the United States’ most powerful battleship, the
Oregon
, stationed in San Francisco, found herself marooned far from the action. The vessel was ordered to proceed at once to the Atlantic, a 15,000-mile course around the Horn. Sixty-seven days later, its heroic progress followed daily by the press, the warship arrived to join the decisive Battle of Santiago Bay. The demonstration of the military significance of a shortcut through an isthmian canal could have been made to order.